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8.7. Diffusion Of Innovation
New products are not immediately adopted by all consumers. Some consumers are driven to buy new products almost as soon as they become available, whereas others prefer to wait until the product has been around for a while before risking their hard-earned money on it. Innovations therefore take time to filter through the population: this process is called diffusion, and is determined partly by the nature of consumers and partly by the nature of the innovation itself. Everett M. Rogers16 classified consumers as follows:
- Innovators: those who like to be first to own the latest products. These consumers predominate at the beginning of the product life cycle.
- Early adopters: those who are open to new ideas, but like to wait a while after initial launch. These consumers predominate during the growth phase of the PLC.
- Early majority: those who buy once the product is thoroughly tried and tested. These consumers predominate in the early part of the maturity phase of the PLC.
- Late majority: those who are suspicious of new things, and wait until most other people already have one. These consumers predominate in the later part of the maturity phase of the PLC.
- Laggards: those who adopt new products only when it becomes absolutely necessary to do so. These consumers predominate in the decline phase of the PLC.
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The process of diffusion of innovation is carried out through reference-group influence. Three main theories concerning the mechanisms for this have been proposed: trickle-down theory, two-step flow theory and multistage interaction theory.
Trickle-down theory says that the wealthy classes obtain information about new products, and the poorer classes then imitate their ‘betters’. This theory has been largely discredited in wealthy countries because new ideas are disseminated overnight by the mass media and copied by chain stores within days.
Two-step flow theory is similar, but this time it is ‘influentials’ rather than wealthy people who are the start of the adoption process. This has considerable basis in truth, but may be less true now than it was in the 1940s, when the theory was first developed; access to TV and other information media has proliferated and information about innovation is disseminated much faster.
The multistage interaction model recognizes this and allows for the influence of the mass media. In this model the influentials emphasize or facilitate the information flow (perhaps by making recommendations to friends or acting as advisers).
Consumers often need considerable persuasion to change from their old product to a new one. This is because there is always a cost of some sort. For example, somebody buying a new car will lose money on trading in the old car (a switching cost), or perhaps somebody buying a new computer will also have to spend money on new software, and spend time learning how to operate the new equipment (an innovation cost).
On the other hand there is strong evidence that newness as such is an important factor in the consumer's decision-making process. In other words, people like new things, but there is a cost attached. Provided the new product offers real additional benefits over the old one (i.e. fits the consumer's needs better than the old product), the product will be adopted. Consumers must first become aware of the new product, and then become persuaded that there is a real advantage in switching from their existing solution. A useful model of this adoption process is as follows:
- Awareness - This will often come about as a result of promotional activities by the firm.
- Trial - For a low-price item (e.g. a packet of biscuits) this may mean that the consumer will actually buy the product before trying it; for a major purchase, such as a car, the consumer will usually need to have a test-drive. Increasingly, supermarkets hold tasting sessions to allow customers to try new products.
- Adoption - This is the point at which the consumer decides to buy the product, or make it part of the weekly shopping list.
Everett Rogers identified the following perceived attributes of innovative products, by which consumers apparently judge the product during the decision-making process:
- Relative advantage- The degree to which the innovation is perceived as better than the idea it supersedes.
- Compatibility- Consistency with existing values, past experiences and needs of potential adopters.
- Complexity- Ideas that are easily understood are adopted more quickly.
- Trialability- Degree to which a product can be experimented with.
- Observability- The degree to which the results of an innovation are visible to others.
- Re-invention- Sometimes users find new ways to use the product (not envisaged by the designers) and sometimes this leads to the creation of whole new markets.
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